UK's Starmer pledges more growth reforms after budget hit to markets
Starmer says budget was first step in growth plan
New government's first budget was big on taxes and borrowing
But growth outlook was largely cut by watchdog
UK government bond prices fell on Wednesday and Thursday
Adds Starmer comments in paragraph 5, former ECB chief Draghi 10-12
By William Schomberg
LONDON, Nov 2 (Reuters) -British Prime Minister Keir Starmer promised reforms to speed up the economy and overhaul the public sector after the Labour government's first budget failed to boost the growth outlook and sent government bond prices into a two-day dive.
Finance minister Rachel Reeves announced a plan on Wednesday that included big increases in tax, borrowing and spending, but Britain's budget watchdog judged that economic growth beyond next year would be weaker than it previously thought.
British government bond prices fell in the hours after her speech and again on Thursday, sending borrowing costs up sharply, before stabilising on Friday.
Writing in the Financial Times on Saturday, Starmer said the budget was a "first step on our mission for growth" but also opened the way for reform of "our creaking central state" and its public services as well as more private sector investment.
"Just as we cannot tax and spend our way to prosperity, nor can we simply spend our way to better public services," he wrote, addressing concerns that the health system and other services needed more than just extra cash to improve.
Some analysts have said that without reform the government may need to raise taxes again in future to fix the public sector, despite Reeves' pledge that her budget was intended to "wipe the slate clean".
Starmer listed plans to meet his promise to voters in July's election to double Britain's economic growth pace such as housing targets, planning system reforms, quicker approval of clean energy projects and a review of how regulators operate.
"This process involves detailed, often painstaking work. For that reason, it is not yet ready to be included in the OBR’s forecast for growth," he said, referring to the Office for Budget Responsibility whose forecasts underpin the budget.
"However, we should be optimistic about the potential," Starmer wrote, focusing on the importance of private sector investment alongside a big increase in public infrastructure spending.
The budget was quickly welcomed by the International Monetary Fund and on Saturday it also won applause from Mario Draghi, the former European Central Bank president who recently advised the European Union on how to boost competitiveness.
"The UK government has chosen to significantly raise public investment over the next five years and has adopted precise rules to ensure that borrowing is used only to fund this investment," he wrote also in the FT.
"Moreover, in order to ensure the quality of spending, transactions will be validated by independent authorities. This increases the likelihood that public investment has a positive net present value and so supports fiscal sustainability."
Writing by William Schomberg
Editing by Angus MacSwan and Frances Kerry
Berita Terbaru
Pengungkapan: Entitas XM Group menyediakan layanan khusus eksekusi dan akses ke Fasilitas Trading Online kami, yang memungkinkan Anda untuk melihat dan/atau menggunakan konten yang tersedia pada atau melalui situs, yang tidak untuk mengubah atau memperluas, serta tidak mengubah atau memperluas hal tersebut. Akses dan penggunaan ini selalu sesuai dengan: (i) Syarat dan Ketentuan; (ii) Peringatan Risiko; dan (iii) Pengungkapan Penuh. Oleh karena itu, konten disediakan hanya sebagai informasi umum. Anda juga harus ketahui bahwa konten Fasilitas Trading Online kami bukan sebagai ajakan atau tawaran untuk untuk melakukan transaksi apa pun di pasar finansial. Trading di pasar finansial mana pun melibatkan tingkat risiko yang signifikan pada modal Anda.
Semua materi yang diterbitkan di Fasilitas Trading Online kami hanya untuk tujuan edukasi/informasi dan tidak boleh mengandung nasihat dan rekomendasi finansial, pajak investasi atau trading, catatan harga trading kami, penawaran, permintaan, transaksi dalam instrumen finansial apa pun atau promo finansial untuk Anda yang tidak diminta.
Konten pihak ketiga apa pun, serta konten yang disiapkan oleh XM, seperti opini, berita, riset, analisis, harga, informasi lain atau link ke situs pihak ketiga yang tersedia "sebagaimana adanya", sebagai komentar pasar umum dan bukan menjadi nasihat investasi. Sejauh konten apa pun ditafsirkan sebagai penelitian investasi, Anda harus memperhatikan dan menerima bahwa konten tersebut tidak dimaksudkan dan belum disiapkan sesuai dengan persyaratan hukum yang dirancang untuk mempromosikan kemandirian riset investasi dan dengan demikian akan dianggap sebagai komunikasi pemasaran di bawah hukum dan peraturan yang relevan. Mohon dipastikan bahwa Anda telah membaca dan memahami Notifikasi pada Riset Investasi Non-Independen dan Peringatan Risiko kami mengenai informasi di atas, yang dapat diakses disini.
